SBJ/October 24 - 30, 2005/Media

ABC/ESPN stalks Cup sans SUM

ABC Sports and ESPN are preparing an $80 million bid for rights to the FIFA World Cup without incumbent U.S. rights holder Soccer United Marketing, a response to FIFA’s desire to work with a media company rather than go through a third-party broker.

SUM, an arm of Major League Soccer, had submitted a bid for English-language rights this summer, but FIFA reached out to U.S. television networks in recent weeks indicating that it planned to grant the rights to one of them directly.

That prompted ABC/ESPN to make its own offer. The company had licensed World Cup rights from SUM for 2002 through 2006 via a time buy.

Objections were raised regarding how moving rights to NBC and Telemundo would affect the growth of pro soccer in the United States.
NBC Universal, Fox and Univision are also suitors for a FIFA rights package that would run through 2014 and include two men’s and two women’s World Cup events.

Representatives of ABC/ESPN and Fox were in Zurich, Switzerland, last week, making presentations to FIFA. Final bids with firm dollar amounts will be submitted Wednesday, said people involved in the talks.

This is a second round of bidding. NBC Universal submitted a bid during the summer, as did SUM and Spanish-language incumbent Univision, which paid $150 million for the World Cup rights for 2002-06.

In September, FIFA’s Marketing and Television Division recommended accepting the offer from NBC Universal, which sources said was worth more than $300 million for English- and Spanish-language rights.

It was expected to be voted on and approved at the FIFA Congress in Marrakesh, Morocco, on Sept. 11-12. But objections were raised regarding how moving rights to NBC and its Spanish-language subsidiary, Telemundo, would affect the growth of soccer, and particularly professional soccer, in the United States. MLS’s future television contracts had not yet been secured and awarding FIFA rights without any involvement by MLS could imperil the league’s future. MLS games have been shown on ABC and ESPN since the league’s inception in 1996, and some also appear on Fox Soccer Channel, through deals that expire at the end of next season.

FIFA then put the process on hold and later began soliciting bids from other U.S. media companies. Once it became clear that FIFA preferred to do a deal directly with a network, MLS and SUM began talking to ESPN and Fox about a separate arrangement that will include an MLS television deal as well as guarantees of cross-promotion through the World Cup telecasts.

Anschutz Entertainment Group President Tim Leiweke, whose company owns four MLS teams and has invested in the construction of multiple soccer stadiums, said he and MLS remain involved in the World Cup bidding process.

“I’ve been in meetings with [FIFA President] Sepp [Blatter] and Phillip Anschutz, and we continue to work with FIFA on the World Cup bid,” Leiweke said. “The World Cup deal is going to be with a network, probably not with SUM, but when it’s all said and done we’re very supportive of that.”

SUM was created in early 2002 when all the major U.S. television networks passed on bidding on FIFA World Cup rights and MLS’s investors were concerned that the World Cup, the ultimate showcase for their sport, would not receive adequate television exposure. They also wanted to promote the professional league and the sport in general as one seamless entity. So MLS’s investors agreed to fund a subsidiary that would pay a $40 million rights fee and handle all ad sales and production costs for FIFA events through 2006, including two men’s and one women’s World Cup. SUM then bought time for the telecasts on ABC and ESPN.

“We stepped in and did World Cup a favor last time,” Leiweke said. “We’re not going to have to do it this time.”

The fact that four media companies are now bidding on World Cup rights means at least part of MLS’s goals have been accomplished, but MLS wants to make sure that its league and the sport as a whole are marketed as one with the World Cup, something MLS Commissioner Don Garber said is essential for future growth.

“Our approach is to find a scenario to integrate all the properties and the entire sport of soccer,” Garber said. “Whether that had to come from a bid through Soccer United Marketing or a relationship we would have through a broadcaster … either approach is good for us.”

The growth of the Hispanic market along with acquisitions by major media companies have made FIFA a highly valued strategic property. NBC paid $2 billion in stock and assumed debt for Telemundo in 2002, and World Cup rights would bring credibility and guaranteed viewers to the Spanish network, which is outpaced in ratings by rival Univision by a 4-1 margin.

Fox will bid on English rights only, sources say, with a heavy focus on its newly rebranded Fox Soccer Channel. Games also would appear on the Fox Broadcast Network and other cable platforms, possibly with pay-per-view or subscription elements offered on cable and the Fox-owned DirecTV.

All of the bidders also have an eye on multimedia rights, including broadband and mobile, platforms that have sizable market value when looking at deals that stretch into the next decade.

“Our collection of television assets — ABC, ESPN and ESPN2 — and multimedia platforms, reaching 120 million people each week, provide the best vehicles to feature live coverage of all 64 World Cup matches,” said ESPN senior director of programming and acquisitions Leah LaPlaca in an e-mail. “We have been saying for a long time that we want to continue our relationship with FIFA, which dates back to 1982 and nine World Cups.”

LaPlaca was joined by ESPN executive vice president of content John Skipper in Zurich last week to make the presentation, marking one of Skipper’s first duties since being put in charge of ESPN’s programming earlier this month.

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